Europe May acrylic acid, esters move up but market still bearish

23 May 2012 23:59[Source: ICIS news]

LONDON (ICIS)--European acrylic acid (AA) and acrylate esters prices for May were on Wednesday assessed at either a rollover from the previous month or up by €10-20/tonne ($13-16/tonne), depending on grade, as the upward movement initially sought by producers was tempered by lower propylene costs this month as well as slower-than-expected demand.

May AA prices have been assessed at €1,950-1,990/tonne FD (free delivered) NWE (northwest ?xml:namespace>Europe), up by €10/tonne from the previous month.

Methyl acrylate (Methyl-A) prices for May were assessed at €1,900-1,960/tonne FD NWE, up by €10/tonne on the high end from April.

Butyl acrylate (Butyl-A) prices were assessed at €1,930-2,040/tonne FD NWE, up by €10-20/tonne from April, while 2-ethylhexyl acrylate (2-EHA) numbers were assessed at €2,200-2,340/tonne, also an increase of €10-20/tonne.

Producers have been struggling to match rising propylene costs since the beginning of the year amid weaker-than-expected demand and aggressively priced spot material being imported into Europe.

Despite the €15/tonne reduction for propylene this month, sellers were keen to recoup lost margins with continued increases across all acrylate grades. However, demand from key end use markets such as coatings and construction has been softer than initially forecast.

“Demand has been okay, but slow for this time of year,” one trader said.

Seasonally, May should be the start of the peak season for key end use sectors such as coatings and construction, but the month has been quieter than usual amid wider political and economic instability.

“Our consumption was slightly lower than forecasted for April and May,” said one buyer. “Therefore we have plenty of stock.”

Despite the declaration of force majeure at Arkema’s Carling site in France earlier this month following technical problems at INEOS Oxide’s oxo-alcohols plant in Lavera, players have not seen any significant impact on the supply/demand dynamic in Europe as of yet.

“The situation there [at Arkema] has confused me,” said one seller, adding that it had expected to see more purchasing activity in light of the force majeure.

Buyers are anxious about building up stock because of the macroeconomic uncertainty, while softer than expected demand is failing to pull volumes from the market.

While no confirmation has been forthcoming from Arkema, players expect that the Carling site will be up and running before the end of the month. However, the company will need to build up stock, and one distributor said that it was already seeing an upturn in enquiries for June material.